NATIONAL NEWS
www.langmarketing.com
Up to 800 Billion Miles Will be Lost to COVID-19 Six Major Takeaways: • 2020 was the fourth year of lower annual mileage on U.S. roads since 2008. • The estimated 400 billion fall in mileage during 2020 was nearly five times greater than the accumulated mileage declines of the three recent years in which U.S. mileage failed to grow: 2008, 2009 and 2011. • Following the Great Recession, it took seven years for annual miles to recover to pre-2008 annual levels. • While driving eventually will return to pre-COVID levels, it is yet unclear how permanent changes in social and business behaviors (social distancing, remote working, etc.) could reset the driving behavior of Americans. • During the three previous reductions in annual mileage since 2008, the drop in driving was matched approximately in magnitude by a decline in the vehicles in operation (VIO). During 2020, however, the plunge in driving was much greater than the VIO annual decline. • The more than 400 billion “lost miles” during 2020 (and up to 800 billion total lost miles) will have a lasting impact on the aftermarket because of the wear-and-tear on vehicles that did not occur due to COVID-19. EV Sales Boom on Hold Electric vehicles (plug-in hybrids and battery electric vehicles) are feeling the impact of COVID-19, with 2020 annual sales down significantly. This will mark the second consecutive annual decline in electric vehicle (EV) volume across the U.S.
But don’t worry, this is the lull before the exponential growth of new EV models over the next few years, which will drive electric vehicle sales through the roof. At least that is the prevailing opinion. A closer look at the EV market, however, indicates that this expected surge in EV sales might not come so soon. EVs must overcome at least four major barriers if they are to significantly expand their new vehicle sales share in the U.S.: First, a substantial gap in operating range still exists between internal combustion engine (ICE) vehicles and EVs. This creates “range anxiety” among many potential EV buyers. Second, the limited life of EV battery systems and their high replacement costs are important issues. In some cases, the estimated battery replacement costs are so high that the operating life of some electric vehicles (especially BEV models) might not be much longer than the life of their original battery systems. Third, the purchase price differences between EVs and ICE vehicles remain high. Without generous rebates or government incentives (which are being phased out) BEVs can cost up to 20 percent more than comparable ICE models. Finally, there is not an adequate nationwide vehicle charging infrastructure that can effectively and conveniently enable electric vehicle owners to charge their vehicles. Odometers Reach Record Heights The average age of cars and light trucks is increasing across the U.S., along with the mileage on their odometers. At mid-year 2019, the typical light vehicle in the U.S. averaged approximately 22,000 more odometer miles than 10 years earlier (2009). The downturn in 2020 vehicle sales has pushed the average age and odometer readings of cars and light trucks to record-high levels. Six Major Takeaways: • The typical car and light truck in the U.S. in 2009 had approximately 101,000 accumulated miles, with the average light vehicle odometer spinning up to 123,000 miles by 2019. Lang Marketing projects that the average light vehicle odometer topped a record-high 126,000 miles during 2020. • Cars averaged more accumulated miles between 2009 and 2019 than light trucks. However, this mileage gap narrowed during this period. • Foreign nameplate cars and light truck have significantly lower accumulated mileage than domestic nameplates. Foreign nameplates averaged 116,000 odometer miles in 2019 compared to 127,000 accumulated mileage on the average domestic nameplate. • Domestic nameplate cars average the highest odometer readings of any major light vehicle group, topping 150,000 odometer miles in 2019. • Not all driving generates the same aftermarket product use per mile since product wear per mile varies significantly by a vehicle’s age and, therefore, its accumulated mileage. • Odometer mileage on cars and light trucks is critical for their aftermarket product use since older vehicles with greater accumulated mileage use more aftermarket products per mile than vehicles with fewer odometer miles.
10 | March 2021
AASP-MN News
